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Dale Jackson

Personal Finance Columnist, Payback Time


The dream of owning a home can be elusive for the 15 per cent of working Canadians who consider themselves self-employed. Income can be sporadic and unpredictable, and that makes lenders nervous.

Starting Oct. 1, the Canada Mortgage and Housing Corporation will open the door a little wider for the self-employed to qualify for a mortgage. The federal mortgage insurance agency will be working with lenders to cater to the unique financial circumstances that come with being your own boss and relax the rules for borrowers who have been in the same business for less than two years.

To meet mortgage insurance requirements, the CMHC is also providing more options for income requirements by allowing a broader range of documentation. One example allows potential borrowers to verify their income through their tax returns provided by the Canada Revenue Agency (CRA).

Mortgage insurance is mandatory if a borrower has a down payment of less than twenty per cent of the purchase price of the home. The mortgage loan insurance premium is calculated as a percentage of the loan and is based on the size of the down payment. The higher the percentage of the total house price, the higher the percentage of the insurance premium.

As with any mortgage insurance, it’s important to know that the policy insures the lender in the event of default, and not the borrower.